Health Plan Weekly

Six Major California Payers Agree to Join Value-Based Primary Care Initiative

Six payers have signed a memorandum of understanding (MOU) to become the first members of the California Advanced Primary Care Initiative, a new program intended to expand the use of value-based primary care in the state.

The initiative is in its early stages, and plenty of work needs to be done to finalize the plans, according to participants in the program who spoke with AIS Health, a division of MMIT. But the agreement calls for the companies to work together to increase their investment in primary care, contract with providers in value-based arrangements, adopt measures that will be publicly released, and hold practices accountable for meeting benchmarks and reward them for strong performance.

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News Briefs: UnitedHealthcare Unveils Rebranded ‘Surest’ Plans

UnitedHealthcare is rebranding a type of employer-sponsored plans previously known as Bind, promising “a new approach to health benefits that removes deductibles and provides clear upfront pricing information to people in advance of treatment.” Now known as Surest, the products are available to self-funded employer plans nationwide and fully insured customers with 51 or more employees in 11 states. The insurer aims to add up to five additional states where self-funded customers can access Surest plans by the end of the year, and notes that more than 150 employers are already using Surest.

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Extension of Boosted ACA Subsidies May Have Small Impact on 2023 Gross Premiums

Now that the Inflation Reduction Act (IRA) has surmounted the key hurdle of passing the Senate — and is expected to soon pass the House of Representatives as well — the Affordable Care Act exchange market is set for another late-season policy shift that could alter next year’s premium rates. However, experts tell AIS Health that the effect on carriers’ overall premium calculations won’t be as significant as the impact on consumers’ out-of-pocket insurance expenses.

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Health Spending Per Capita Is Expected to Grow Moderately Over Time

The COVID-19 pandemic significantly impacted health spending in 2020 and its long-term health effects are adding more uncertainties looking ahead, according to the Peterson-Kaiser Family Foundation.

Health spending per capita jumped at a rate of 9.3% in 2020 from the prior year, mainly caused by the COVID-related public health activities. Meanwhile, out-of-pocket health spending declined 4.0% per capita in 2020, as a result of delayed or forgone routine care during the early months of the pandemic. Looking forward, CMS expects health spending and prescription drug spending to grow moderately through 2030, but the new COVID variants and treatments add a great deal of uncertainties to the coming years. Out-of-pocket health spending growth was expected to rebound starting in 2021 and average at a rate of 3.5% for the following seven years.

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CVS May Join Insurers’ Home Health Care M&A Spree

CVS Health Corp. is on the verge of making a bid on home health care provider Signify Health, Inc., according to an Aug. 7 report from the Wall Street Journal. Health care insiders tell AIS Health, a division of MMIT, that CVS’s rumored move — part of a planned $25 billion transaction spree — accelerates an existing trend of diversifying health care firms buying their way into home care, even as the rate of transactions in the space slows.

CVS, the parent company of Aetna, is just the latest national health insurance firm with designs in the home care market. As the deal has not been announced, terms have not been disclosed, but Signify’s market capitalization is north of $4.5 billion, per the Journal. UnitedHealth Group, the multi-hyphenate parent company of insurer UnitedHealthcare, announced a $6 billion cash bid for home care provider LHC Group, Inc. in June.

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MCO Stock Performance, July 2022

Here’s how major health insurers’ stock performed in July 2022. UnitedHealth Group had the highest closing stock price among major commercial insurers as of July 29, 2022, at $542.34. Humana Inc. had the highest closing stock price among major Medicare insurers at $482.00.

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Morgan Health Study Flags Disparities in Employer-Sponsored Insurance

In a finding that could serve as a wakeup call for health insurers and their employer clients, a new study has found that significant health disparities exist among workers based on their race, ethnicity, income levels and sexuality.

Caroline Pearson, senior vice president of health care strategy at NORC at the University of Chicago, says the results show companies must do much more than simply offer coverage to their employers and need to focus on other issues impacting their health outcomes. NORC, a nonpartisan research organization, conducted the study of employer-sponsored insurance (ESI), which was sponsored by Morgan Health, the health care arm of JPMorgan Chase & Co.

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News Briefs: Uninsured Rate Reaches Record Low

The national uninsured rate reached an all-time low of 8% in the first quarter of 2022, according to new data from the HHS’s National Health Interview Survey. Since 2020, about 5.2 million people have gained coverage, which the report attributed to enhanced marketplace subsidies under the American Rescue Plan Act, the suspension of Medicaid redeterminations during the COVID-19 public health emergency, several recent state Medicaid expansions and “substantial enrollment outreach” by the Biden administration in 2021 and 2022.

If the 12 holdout states expanded Medicaid eligibility under the Affordable Care Act, 3.7 million fewer people would be uninsured next year. That’s according to a new analysis from the Urban Institute and Robert Wood Johnson Foundation, which noted that “Black individuals, young adults, and women —particularly women of reproductive age — would realize the largest coverage gains if the 12 states expanded eligibility.” Fiscally speaking, extending Medicaid expansion nationwide would increase federal spending by $34.5 billion in 2023, but that would be partially offset by $2.6 billion less government spending on uncompensated care.

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Insurance, Retail Segments Help CVS Beat Expectations in Second Quarter

Although many people still associate CVS Health Corp. with its ubiquitous retail pharmacy locations, executives during the company’s second-quarter 2022 earnings call highlighted the Health Care Benefits segment — which houses legacy health insurer Aetna — as one of the firm’s strongest business assets. Meanwhile, the Rhode Island-based company said it’s planning to acquire more care-delivery assets by the end of the year.

During an Aug. 3 conference call to discuss quarterly financial results, CEO Karen Lynch touted the Health Care Benefits segment’s “strong quarter,” noting that the business line saw revenue growth of nearly 11% compared to the prior-year period. The firm’s medical loss ratio (MLR) of 82.9% also improved by 120 basis points year over year, “reflecting medical cost trends that remain modestly favorable to our pricing assumptions,” according to Chief Financial Officer Shawn Guertin.

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Cost-Control Efforts Pay Off for Cigna in Second Quarter

Cigna Corp.’s ability to rein in medical costs during the second quarter of 2022 impressed equities analysts and led the health insurer on Aug. 4 to surpass the Wall Street consensus earnings per share (EPS) estimate while raising its full-year EPS outlook.

Cigna posted “the largest MLR beat among MCOs this quarter,” with its medical loss ratio of 80.7% coming in 220 basis points below the consensus estimate, Evercore ISI analyst Michael Newshel pointed out in a note to investors. That comes after a 110 basis-point beat in the first quarter of 2022, he added.

And SVB Securities analyst Whit Mayo observed that “medical costs were well-controlled during the quarter,” with Cigna’s MLR “driving the bulk of the [company’s] outperformance.”

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